Purchasing your own home is one of the most important financial decisions you’ll make. Applying for a mortgage is the first key step in the journey to home ownership, but if you’ve found your dream home and your mortgage application is denied, you could feel at a loss. You are much less likely to be denied a mortgage if you prepare thoroughly, so you should consult a mortgage advisor before making your mortgage application. It’s a good plan to obtain a pre-approval from the lender you choose, so you know what properties you can afford. This pre-approval is usually guaranteed for 90 days. Reasons a mortgage application might be denied If your application is denied, it’s because the lender does not believe you are able to make the repayments. It’s essential that you find out why your application was denied. Make sure the lender has all the paperwork they require,…

The various types of mortgages can seem bewildering to the first time homebuyer, but understanding all your mortgage options will help you make the best financial decision when choosing your mortgage. This article explains the difference between a closed mortgage and an open mortgage. What is a closed mortgage? A closed mortgage agreement is a mortgage which can not be renegotiated, repaid, or refinanced for the duration of the mortgage (i.e., until the mortgage reaches maturity). If you wanted to make any changes to your mortgage, you would be subject to a prepayment charge. What is an open mortgage? An open mortgage agreement is much more flexible than a closed mortgage. You will be able to make prepayments at any time, and in some cases may be able to pay off the mortgage before the end of the mortgage term, with no prepayment charges. The interest rate for open mortgages…

Your mortgage amortization period is the total length of time over which your entire mortgage will be completely repaid. It might be helpful to compare this with your mortgageterm, which is the length of time you have a mortgage agreement with your current lender. Typical Canadian mortgages are 5-year terms with 25-year amortizations. Mortgage term Your mortgage term is usually from between 6 months to 10 years, depending on your lender and your financial situation. During this term, you receive the same rate. When your mortgage term is up, you will renew your mortgage either with your current lender, or with a new lender. Mortgage amortization Mortgage amortization periods affect your monthly mortgage payments. Longer amortization periods mean you have lower monthly payments, but because you are repaying the loan over a longer period, you will pay more in interest rates by the time your mortgage is paid off. All…

Are you worried that your credit history will prevent you from owning the home of your dreams? Although a poor credit rating will affect your mortgage rate, you may be able to get a mortgage even if you have bad credit. What is your credit score? Your credit score is a number that indicates how likely you are to repay future debts, which is calculated by a credit bureau. In Canada, your credit score will probably be assigned by either Equifax or TransUnion. This score is based on your credit report, which is basically a summary of your credit history. Your credit history includes personal financial information, credit account information, and your employment history. If you suspect you have bad credit, you should make sure you know your credit score. You can pay a fee to Equifax or TransUnion for a copy of your credit report, or you could obtain…

When your mortgage term is up, you will have to renew your mortgage to cover the outstanding balance you owe on your home. This can be a stressful time, so make sure you are fully informed. Here are some FAQs about mortgage renewal: When is my mortgage term due? The maturity date will be on your mortgage contract. You have to make sure you know when your mortgage matures, so you can make plans in advance of this date. What is a mortgage renewal slip? Your lender will send you a renewal slip at least 21 days before your existing term matures, if your agreement is with a federally regulated financial institution. You will be offered a new term offer with a new mortgage rate. You can choose to sign the slip to accept the offer, or renegotiate your mortgage. You might not get the best terms if you simply…

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